AS VENTSPILS NAFTA (UNIFIED REGISTRATION NUMBER 50003003091) UNAUDITED CONSOLIDATED FINANCIAL REPORT FOR THE SIX MONTHS OF 2009 PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS Ventspils, 2009 WorldReginfo - 61d1ffa4-5c1d-48ad-8980-9607a4f46de6 AS Ventspils nafta Unaudited Consolidated Financial Report Address: 23 Ostas street, LV-3601, for the six months of 2009 Ventspils, Republic of Latvia Unified registration number: 50003003091 CONTENTS General information 3 Council of AS Ventspils nafta 4 Board of AS Ventspils nafta 4 Management Report of JSC Ventspils nafta 5 Statement of Management Responsibility 7 Income Statement 8 Balance Sheet 9 Statement of Cash Flows 11 Statement of Changes in Shareholders’ Equity 12 2 WorldReginfo - 61d1ffa4-5c1d-48ad-8980-9607a4f46de6 AS Ventspils nafta Unaudited Consolidated Financial Report Address: 23 Ostas street, LV-3601, for the six months of 2009 Ventspils, Republic of Latvia Unified registration number: 50003003091 General information Name AS Ventspils nafta Type of entity Joint stock company Registration 50003003091 Riga, 9 May 1991 Registered in Commercial Register on 5 August 2004 Legal address Ostas street 23, LV-3600, Ventspils, Republic of Latvia Subsidiaries of AS Ventspils nafta SIA LatRosTrans (66%) 7 Balvu street, LV-5043, Daugavpils SIA Ventspils nafta termināls (51%) 75 Talsu street, LV-3600, Ventspils Associated entities of the Group AS Latvijas kuģniecība (49.94%) 2 Basteja bulvāris, LV-1807, Riga SIA Futbola klubs Ventspils (42.50%) 20a Dzintaru iela, LV-3602, Ventspils 3 WorldReginfo - 61d1ffa4-5c1d-48ad-8980-9607a4f46de6 AS Ventspils nafta Unaudited Consolidated Financial Report Address: 23 Ostas street, LV-3601, for the six months of 2009 Ventspils, Republic of Latvia Unified registration number: 50003003091 Council of AS Ventspils nafta Chairman of the Council: Vladimirs Solomatins Deputy Chairman of the Council: Dennis Crema Andris Vilcmeiers Jeffrey Scott Martz Members of the Council: Māris Gailis Gints Laiviņš - Laivenieks Paul Edward Mulholland Ashley John Neale Ansis Sormulis Mamerts Vaivads Vladimirs Krastiņš Board of AS Ventspils nafta Memebers of the Board: Olga Pētersone Aldis Āķis till 26/02/2008 Ilva Purēna Guntis Tīrmanis Normunds Staņēvičs from 26/02/2008 4 WorldReginfo - 61d1ffa4-5c1d-48ad-8980-9607a4f46de6 AS Ventspils nafta Unaudited Consolidated Financial Report Address: 23 Ostas street, LV-3601, for the six months of 2009 Ventspils, Republic of Latvia Unified registration number: 50003003091 Management Report of JSC Ventspils nafta First half-year of 2009 Dear shareholders, clients and cooperation partners. The results for the first six months of 2009 have acknowledged that activity of companies of public joint stock company Ventspils nafta Group is stable and corresponds to the financial results planned in the budget also after operation of JSC Ventspils nafta Group was reoriented to management of investments only in the transit business segment. Considering activity of JSC Ventspils nafta Group companies in the international market, circumstances of global economic crisis have affected all Group companies in the reporting period, yet they have been able to take balanced actions corresponding to the complicated situation. General tendencies in the financial instrument markets worldwide and macroeconomic situation in Latvia have had impact also on securities quoted at NASDAQ OMX Riga, including shares of JSC Ventspils nafta. In the reporting period, price of JSC Ventspils nafta shares has ranged from LVL 0.59 to LVL 0.99, with the average price per share reaching LVL 0.69. Market capitalization of JSC Ventspils nafta shares in the end of first half-year of 2009 was LVL 93.0 million in comparison with LVL 203.7 million in analogue period in 2008. At the same time during the second quarter of 2009 the price of the share has strict tendency to increase; thus, the price of share was 0.68 LVL in the end of the first quarter of 2009 but in the end of the first half- year of the 2009 the price of share already reached 0.99 LVL, growing approximately 45.6% during the second quarter. Correspondingly the market capitalization has increased, market capitalization of JSC Ventspils nafta in the end of first quarter of 2009 was LVL 71.0 million, yet in the end of first half – year of 2009 already LVL 93.0 million. However, it must be considered that market value calculation by usage of insignificant amount of public share market transactions is not representative, as the liquidity level is too low – the average turnover of transactions with JSC Ventspils nafta shares per day in the first six months of 2009 was LVL 2 thousand, which is only 0.002% of the total share market capitalization amount. The consolidated net turnover of JSC Ventspils nafta in the first half-year of 2009 has reached LVL 39 million, and net profit – LVL 0.9 million. The mentioned results entirely correspond to the budget forecasts for 2009 published before by JSC Ventspils nafta, anticipating the consolidated net turnover of the Group to be at least LVL 60 million, and the net profit – at least LVL 2 million. The JSC Ventspils nafta subsidiary Ventspils nafta termināls Ltd has transshipped in total more than 6.4 million tons of crude oil and petroleum products in the first six months of 2009, thereby continuously ensuring stable activity of the company aimed at growth in the inconsistent international market circumstances. In context of long-term development prospects, the company continues strengthening its positions as the most modern complex of crude oil and petroleum product transshipment in the Baltic region, by planning its operation under the same principles as other companies under the international Vitol Group, co-owner of Ventspils nafta termināls Ltd, around the world. The largest proportion of the cargos transshipped by Ventspils nafta termināls Ltd in the period of January-June 2009 is formed by 4.7 million tons of diesel fuel delivered via petroleum products pipeline and by railway. 1.3 million tons of the total transshipment volume is formed by motor gasoline of various grades transported by railway and other petroleum products, and 0.4 million tons – by crude oil and petroleum product cargos delivered by sea. Ventspils nafta termināls is the largest of such companies in the region, and its crude oil and petroleum products shore-tank farm reaches 1.2 million cubic meters and has no analogues among similar companies in the nearest countries. 5 WorldReginfo - 61d1ffa4-5c1d-48ad-8980-9607a4f46de6 AS Ventspils nafta Unaudited Consolidated Financial Report Address: 23 Ostas street, LV-3601, for the six months of 2009 Ventspils, Republic of Latvia Unified registration number: 50003003091 Also the JSC Ventspils nafta subsidiary, owner and operator of crude oil and petroleum products pipeline in the territory of Latvia LatRosTrans Ltd has worked persistently in the reporting period in accordance with previous budget forecasts – the company has gained revenue mostly by transporting petroleum products to the Ventspils port. LatRosTrans Ltd is planning to pipe up to 5 million tons of diesel fuel in 2009. Oil transportation in the direction of Lithuania via the pipeline owned by LatRosTrans Ltd is still not resumed due to the geopolitical situation. To maintain a positive cash flow in this situation, the company’s management regularly assesses and reduces economic activity expenditure. A decrease in expenditure of more than LVL 1.5 million was achieved in the budget of LatRosTrans Ltd for 2009 as against expenditure of 2008. At the same time, also different other options of enlarging income sources of the company are analyzed. In the reporting period, also the JSC Ventspils nafta associated company JSC Latvian Shipping Company continued pursuing its strategic activity goal – ensuring increase in the Group’s value and retaining its position among the leading medium range tanker owners in the world. Irrespective of the low market activity and the sharp decline in the market of ship charter rates, net profit of JSC Latvian Shipping Company in the first half-year of 2009 has reached USD 9.3 million as a result of effective expenditure optimization. Despite the global economic crisis, which directly affects demand for raw materials, JSC Latvian Shipping Company managed to ensure successful basic activity in the reporting period, as the result from ship activity even increased by 10% in comparison with the first half-year of 2008. The global situation pertaining to financially economic development and the local conditions are indicating at present that the companies of JSC Ventspils nafta Group have to reckon with hard and difficult work also following the end of the reporting period in order to also further on guarantee their stable operation. As before, the companies of JSC Ventspils nafta Group continue working, by ensuring that interests of all shareholders are observed. Chairperson of the Management Board for JSC Ventspils nafta O.Pētersone 6 WorldReginfo - 61d1ffa4-5c1d-48ad-8980-9607a4f46de6 AS Ventspils nafta Unaudited Consolidated Financial Report Address: 23 Ostas street, LV-3601, for the six months of 2009 Ventspils, Republic of Latvia Unified registration number: 50003003091 Statement of Management Responsibility The Management of JSC “Ventspils nafta” (hereinafter – the Company) is responsible for preparation of consolidated financial statements of the Company. The financial statements set out on pages 8 to 12 are prepared in accordance with source documents and fairly present the financial position of the Company as at 30 June 2008 and 2009 and operating results for the first half-year of 2008 and 2009, changes in shareholders’ equity and cash flows for the periods then ended. The aforementioned financial statements are prepared in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board on an going concern basis. During the reporting period, appropriate accounting policies have been applied on a consistent basis. Prudent and reasonable judgements and estimates have been made by the Management in the preparation of the financial statements.